Taiwan earthquake rocks chip world

The earthquake in Taiwan may lead to further price hikes in the computer chip market.

The memory market, already experiencing a period of globally rising prices, is preparing itself for a second, inflationary wave.

"The damage has not yet been disclosed but chip production-lines are very sensitive to tremors and I think this will lead to another rise in chip prices," said Jon Chong-hwa, an analyst at Salomon Smith Barney KEB Securities in Seoul.

"The reports that we're getting suggest that damage to fixed capital is probably not excessive. Nonetheless, with respect to the semiconductor industry, power outages and excessive vibration can cause substantial losses in work in progress,'" said Duncan Wooldridge, a senior economist on Taiwan at Merrill Lynch, Hong Kong.

As a result of the disaster, share prices in Taiwanese chipmakers soared, as speculators invested in the hope that a steep rise in prices would lead to tidy short-term gains. Samsung Electronics rose 8.6 per cent, Hyundai Electronics 13.1 per cent and Hyundai Microelectronics rose 12.9 per cent. Between them, these manufacturers account for 35 per cent of world DRAM sales.